The pay equity conversation can't end here

Wednesday, 2 July 2025

Protests at Parliament did not move the dial on the removal of pay equity claim options - but the conversation should not stop there, says Cathy Hendry.

Cathy Hendry is the managing director of remuneration solutions organisation Strategic Pay.

OPINION: Changes to New Zealand's pay equity claim process have triggered a wave of emotions: anger, disappointment, confusion, and another less appropriate C-word. None of this is surprising. For many, it felt like progress was being wound back. In some ways, it was, but these pay equity claims were never going to fix the systemic issues that have led to women’s work being undervalued for centuries.

While debate has quietened, the need for action hasn't. Pay equity claims were essentially the ambulance at the bottom of the cliff. They're a last resort. Often necessary, but reactive by nature.

What we need now are guardrails at the top.

The numbers reveal a problem far bigger than many realise, and business leaders are uniquely placed to do something about it, says Hendry.

The conversation about pay equity cannot end with changes to legislation. The onus isn’t only on the Government to fix this mess. This conversation must now be picked up with greater urgency by boards and leadership teams across Aotearoa. The reality is that the numbers reveal a problem far bigger than many realise, and business leaders are uniquely placed to do something about it.

Here’s what the data tells us: New Zealand’s official gender pay gap (as measured and reported by NZ Stats) has narrowed from 16.3% in 1998 to 8.2% today. But that progress is slowing. For wāhine Māori, Pasifika, ethnic minorities, and disabled women, the gap is significantly higher and closing even more slowly. We’ve conducted our own research on pay gaps over the last five years and have found this gap to be even larger when you include benefits and incentive schemes.

Research within New Zealand has found that only 20% of the overall gap can be explained by drivers such as type of work, family responsibilities, education and age. The remaining 80% is due to ‘unexplained’ factors such as behaviours, attitudes and assumptions about women in work including unconscious bias in everyday decisions.

Our most recent analysis revealed a clear pattern. Over six years of reporting, we've seen a steady reduction in pay gaps year on year, but this progress has come largely from the public and not-for-profit sectors. The public sector is required to report, while not-for-profits have benefited from large pay equity claims.

Pay equity protest

In contrast, the private sector, which has no reporting obligations, has gone backwards: from a 20.1% overall gap in 2022 to 24.2% in 2024. The takeaway is clear: transparency drives progress, but only when paired with accountability.

Understanding what really drives pay gaps is crucial. The distinction between pay equity and pay gaps is often misunderstood. Pay equity is ensuring the same pay for different work of equal value, in New Zealand, this is a legal process that corrects historical undervaluation. A pay gap, however, reflects broader issues: bias in hiring, progression, negotiation, or organisational structure. One is a claim. The other is a pattern.

Many causes of pay gaps are embedded in everyday decisions that seem fair on the surface but create lasting disadvantages. Take starting salaries: when women begin on lower pay – often due to assumptions about what they’ll accept – each future pay rise builds on that lower base.

How jobs are valued matters too. Roles traditionally held by women, like administrators, are often benchmarked only against each other rather than the broader market, which keeps their pay lower. Job sizing offers a more equitable alternative.

Career progression systems also contribute. Tiered pay structures may appear neutral, but they can penalise those who take parental leave or don’t move up the ladder as quickly, even with equal qualifications.

Cathy Hendry, chief executive of Strategic Pay, says business leaders need to collectively measure and try to understand the key drivers of pay gaps within their industry

And broader societal norms play a role. Research has shown that women’s earnings drop sharply after becoming parents and often don’t recover for a decade. Men, meanwhile, continue to earn more. Equal capability doesn’t guarantee equal outcomes when systems fail to account for different life patterns.

Yet, some organisations aren't waiting for mandates. The energy sector in New Zealand has worked together to collectively measure and try to understand the key drivers of pay gaps within their industry. Through this research they have been able to agree on steps and initiatives to try and address pay gaps. Transpower NZ used the Ministry for Women's toolkit, acknowledged their 'power gap,' and committed to change. As they put it, 'peeking in the mirror' was a necessary first step. These examples demonstrate what's possible when organisations take ownership rather than waiting for external pressure.

That’s the kind of leadership we need more of.

This moment isn’t about blame. It's about opportunity. Leadership today requires more than awareness. It demands action. That starts with taking a close look at how pay is set and progressed in your organisation: analysing data, reviewing frameworks, and questioning whether your systems truly support equitable outcomes across different career journeys.

Legislation has its place, but it won’t solve the problem alone. What’s needed is a shift in mindset from passive compliance to active accountability.

As business leaders, we face a choice: wait for the next mandate, or set the pace ourselves. Progress from 16.3% to 8.2% over 26 years is something, but it’s not enough. At this pace, pay equity remains decades away. But organisations that act now can accelerate that trajectory for their people, for their performance, and for the future of Aotearoa.